Split payment and new VAT matrix enacted
The mandatory split payment takes effect starting from 1 November 2019 and not from 1 September 2019.
In the first place, VAT will need to be paid to a separate VAT account of those entities that operate in sectors particularly prone to tax fraud, to which the reverse charge or joint liability mechanisms have applied to date, i.e. the construction sector, the supply of electronics, fuel, steel products, scrap metal and precious metals. The split payment will apply to invoices of the value exceeding PLN 15,000 gross for the goods and services indicated in the new Annex 15. The penalty for failure to include the “split payment” note on the invoice or failure to pay for the invoice using the mechanism will amount to 30% of the tax indicated on the invoice. Additionally, the taxpayer will not be allowed to recognise expenses paid in breach of the new regulations (without applying the split payment mechanism) as deductible costs.
Moreover, certain facilitations were introduced in the application of the split payment mechanism, namely:
- In addition to VAT payment and payment of VAT resulting from counterparties’ invoices, the VAT account can also be used to pay income taxes, excise duties, customs duties, import VAT and social security contributions,
- Split payment can be used for prepayments made before invoice issuance.
- Transfer of payments for more than one invoice will be possible using a single transfer command.
New VAT matrix
1 April 2020 will mark the effective date of the new VAT matrix. The new matrix is based on the following assumptions:
- the 2008 PKWiU (Polish Classification of Products and Services) is to be replace with the Combined Nomenclature for goods and the 2015 PKWiU – for services,
- entire groups of goods and services are to be taxed with the same rate insofar as possible
- if rates need to be changed, the ‘levelling down’ rule is to apply.
The changed rates are to take effect starting from 1 November 2019. This will also be the effective date for regulations concerning the Binding Rate Information whereby the taxpayers would be able to get binding information regarding the VAT rates.